Tax on Capital Gains in Shares

[fionn2011]

Sorry, please forgive my rather basic question: Say you buy bank shares for 20K and they are now +/- worthless, so you have a capital loss of 20K.

You now buy €20K's worth of shares in some other company, they double in a year to €40K, and you sell. Ignoring annual exemption to keep things simple, you now have a capital gain of €20K, which ordinarily is taxed at 30% (/), so the tax due is €6K.

However, because you have 20K in losses in the same asset class, no tax is due

Q. Have you now "used up" your full capital gains offset, or have you still got 14K "left" going forward ie are the €20K in previous losses offfsetable against the gross capital gain (20K) or the net tax due(€6K)? As I say, I've ignored the annual allowance of €1270 or whatever it is.

 

[callybags]

You have used up all your losses.

The loss is set against the gain- not the tax liability.

 

[Brendan Burgess]

Check out the Key Post

http://www.askaboutmoney.com/showthread.php?t=122325

It's a bit out of date, but the principles are correct.

Brendan

 

[fionn2011]

Ok, so what you are saying is that (ignoring annnual exemption for simplicity), you can only "erase" roughly 6Ks worth of losses on a 20K loss on bank shares?

 

[callybags]

Ok, so what you are saying is that (ignoring annnual exemption for simplicity), you can only "erase" roughly 6Ks worth of losses on a 20K loss on bank shares?

No. You eliminate 6 Ks worth of "tax liability" which is the liability due on 20K of gain.

1. Gain from Selling of shares €20,000
CGT Liability €20,000 @ 30% = €6,000

2. Gain from selling of shares €20,000
Less: Losses Carried Forward ( €20,000 )
Taxable Gain ZERO

 

[dharn1]

new question

i have shares in a publicly listed company which is now gone bust i cannot sell the shares, they have zero valuation now, so how do i register the loss to offset capital gains in the future ( assuming such an event ever occurs ! )

 

[ClubMan]

This is covered in the key post that Brendan linked to earlier.

 

[Ham Slicer]

i have shares in a publicly listed company which is now gone bust i cannot sell the shares, they have zero valuation now, so how do i register the loss to offset capital gains in the future ( assuming such an event ever occurs ! )

[broken link removed]

I wouldn't really bother registering the loss but if you wanted, in the case of Anglo, you could just complete a Form CG1 for 2009.